Anonymous

# HICKSIAN DEMAND MC?

Suppose regular demand for x, when Px = 2, is 8. When Px increases to 4, the consumer buys 4 units of x. When this consumer is "compensated" for the increase in price, they would would buy 3 units of x.

A. The substitution effect is -3 units of x. The income effect is -2 units of x.

B. There is something wrong with this question: substitution effects are moving in the wrong direction.

C. There is something wrong with this question: income effects are moving in the wrong direction.

D. There is nothing wrong with this question. This is an inferior good.

There are no answers yet.

Be the first to answer this question.

Be the first to answer this question.